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This article is for Marketing Magazine.

Advertising in a Down Economy The marketing budget is always the first to go in a business when times are hard.

But what are the benefits of advertising in these difficult times?

Nursing a business through the worst recession for half a century is becoming one of the most pressing tasks for businesses, big and small. The knee-jerk response is to trim costs by cutting back on your marketing budget, but many experts think this can be one of the biggest mistakes a business can make. When the going gets tough, thatʼs the time to keep investing in your marketing strategy.

One of the leading advocates of marketing your way out of trouble is Stephen Derrick, Managing Director of Action Coach Business Coaching in the Northeast said: “If advertising is important when times are good, then why should it be any different when times are not so good?ʼ says Davidson. ʻObviously it isn't but because business owners see advertising as a cost, then they feel they should cut back when times are tough. However, if an investment, like advertising, were generating a return on the investment made, then why would you cut back on that investment? The real issue is getting it right so that it's providing the best return, not to stop doing it to reduce cost.”

With the majority of businesses cutting their marketing budget first, specifically advertising, then the market itself becomes less competitive. This will always allow those businesses that maintain or increase their budget to remain at the top of the buyersʼ minds. If companies increase their advertising budget in hard times, consumers are more likely to think that they are more professional or that the product they are selling is worth buying, because unlike other businesses they have gone the extra mile and advertised well. Furthermore the cost of advertising will almost always come down in a recession, and magazines newspapers, TV, radio and poster companies will lower the price of their advertising to try and encourage businesses to buy time or space.

McGraw-Hill Research did a study of 600 business-to-business companies in 2008 and found that; in the recession period between 1981-1982, businesses that maintained or increased their advertising budget averaged a higher sales growth during the recession period and three years following it. Sales had risen 256% over those that had cut back on advertising. (Statistics taken from Innovating through Recession by Andrew Razeghi) An effective tool is always knowing your market inside out and making sure you advertise correctly to maximise the return on investment. Consumers in a down economy donʼt stop buying altogether; they are just more selective in what they buy.

If they recognize your product from effective advertising then they are more likely to trust you as a company and healthy sales will result.

Managing Director of Karol Marketing, Stefan Lepkowski, does not always believe that advertising solely is the most effective way of marketing a product:

“Advertising doesnʼt always bring in a direct return,ʼ he says. ʻIn fact it rarely does.

You have to involve PR, direct mail, sales promotion, web etc. Really, advertising creates awareness: itʼs the first stage of communication. You then have to get your customer from this position to one where they want to buy - action. The stages you have to move them through are – Awareness, Interest, Desire and then Action.

Advertising rarely does all of this.”

Advertising can however work effectively as long as you also practise in a variety of media sources and not just put all your money into one form of advertising. Web advertising is quickly becoming one of the most valuable ways of increasing brand recognition, with people using the Internet on an average of 5 hours per day. Other forms of media advertising are magazines, newspapers and tradeshows.

Advertising is one of the most effective tool in marketing and companies should consider this when cutting their marketing budget in a down economy. The consumer industry is constantly changing and if a business cuts the cost of their advertising they run the risk of being taken over by competitors willing to take the risk. There are always going to be risks in business with whatever you do, donʼt let not taking that risk push you out of the game completely. Build your brand while the economy is cheap and in the post-recession consumers will already be aware of your brand, and other competitors will have to work harder in the market to gain brand recognition.

Marketing guru, Seth Godin said: “There's plenty of bad economic news floating around. From the price of oil to Wall Street to bailouts to the death of traditional advertising. Which is great news for anyone hoping to grow or to make an impact.”